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Buying or selling an out-of-the-money put option and call option on the same underlying instrument, with the same expiration. Profits are made only if there is a drastic change in the underlying instrument's price.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

Strangle Strategy

An option strategy in which one buys two out-of-the-money options (usually one call and one put) on the same asset at different strike prices. One profits from a strangle position when there is a large price movement on the underlying asset, regardless of the direction. This is because one of the options will become in the money, so long as the price moves in one direction or the other. Loss only occurs if the price of the underlying asset remains largely the same.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved


A strangle is a hedging strategy in which you buy or sell a put and a call option on the same underlying instrument with the same expiration date but at different strike prices that are equally out-of-the-money.

That is, the strike price for a put is above the current market price of the stock, stock index, or other product, and the strike price for a call is below the market price.

If you buy a strangle, you hope for a large price move in one direction or another that would allow you to sell one of the contracts at a significant profit. If you sell a strangle, you hope there's no significant price move in either direction so that the contracts expire out-of-the-money and you keep the premium you received.

Dictionary of Financial Terms. Copyright © 2008 Lightbulb Press, Inc. All Rights Reserved.
References in periodicals archive ?
Samples Collection: A total of 194 samples of nasal discharge were collected using sterile cotton swabs, and 56 pus samples from affected sub-mandibular lymph nodes were collected aseptically using sterile disposable syringes, from clinically strangles affected animals.
The highest prevalence of strangles was recorded in horses less than 2 years as compared to those having age more than 2 years.
equi infections of the upper respiratory tract and lymph nodes (strangles) in horses to be 47.5% for 1-year-old horses, and 37.5% for foals.
Horse owner Jane Evans of Rhuddlan says she has been 'treated like a leper' by the equine community after her gelding Herbie (inset) caught the feared disease of strangles Main picture: ROBERT PARRY JONES
Morris, who is understood to be pleased with how the situation has been handled since the case came to light last week, added: "Strangles is a nasty disease, but the big thing is that trainers shouldn't be penalised for being vigilant.
The last strangles scare to hit racing was five years ago when two cases were found at a livery yard near Epsom ten days before the Derby.
STRANGLES is the most commonly diagnosed infectious equine disease in the world.
"Strangles is contagious only by contact, and as there is no crossover of staff between us and Kingwood Stud, I'm hopeful we will not have a problem."
An outbreak of strangles is rare within racing, but there was a case in the Lambourn area in 2000 in a horse imported from Ireland by Charles Egerton.
With the help of the Wellcome Trust Sanger Institute, he and other researchers have been able to compare the DNA of the virulent bacterium Streptococcus equi, which causes strangles, with that of the closely related but generally harmless Streptococcus zooepidemicus.
The Princess Royal opened the meeting, held at the Royal Society of Medicine in London, by describing her own experience with an outbreak of strangles in her stables.